YE Junk Bond Default Rate Prediction Revised
Down

December 5, 2002 (PLANSPONSOR.com) - Standard &
Poor's has cut its projected year-end US junk bond default
rate forecast to between 7% and 7.5% from between 8% and
8.5%, the credit rating agency announced.

The agency said the default rate, which covers the prior
year, dipped in November to 7.84% from 8.38% in October,
according to Reuters. The rate stood at 9.77% at the end of
2001 and hit its peak of 12.4% in July 1991.

Defaults in junk bonds, rated lower than “BBB-minus” by
S&P because of their risks, had been lingering higher
this year than many experts had forecast. That was because
of the struggling US economy, tighter credit markets,
poor spending, and the number of high-profile corporate
accounting scandals, Reuters said.

The US “investment-grade” default rate, which covers
such companies as WorldCom Inc. that sank quickly into
default from investment-grade, has reached 0.5% this year,
surpassing last year’s 0.4%, S&P said.

S&P also said 57 companies, with $40 billion of
bonds, remained in a shaky position, with credit ratings
no higher than “CCC,” S&P’s fourth lowest grade other
than default, and either a “negative” outlook or being on
review for downgrade.